Home Loan Interest Rate :If you are going to take a home loan, do not take low EMI, but keep an eye on the interest rate of the banks. Once you have taken the loan, keep checking your home loan account from time to time. In fact, when interest rates increase, most banks increase the tenure of the home loan instead of increasing the EMI amount. Due to this, the EMI which can be completed in 240 months, gets extended by several more months. At the same time, many people increase the tenure themselves in order to get a cheaper EMI. Due to this, the burden of EMI can increase by 5 to 10 years and you lose lakhs.
Case 1: EMI duration increases
When the interest rate on home loan increases, this pressure increases on the customers in two ways. Most banks do not change the amount of monthly EMI, but instead increase the years of loan. You can understand this way that suppose the bank increases the loan rate and this increases the pressure of Rs 1000 per month on your monthly EMI. Whereas now you have to pay EMI for 180 months more. Instead of adding it to the monthly EMI, the banks extended the tenure to repay it. This tenure can be extended for 5 to 6 years. That is, the EMI which you had to pay for 20 years, now you may have to pay it for 25 or 26 years or 30 years.
Case 2: To avoid expensive EMI, you extend the year
The second case is that the EMI amount increases due to increase in the interest rate of the loan. In such a situation, many customers increase the loan duration to reduce the EMI. For example, they ask the bank for the option of paying EMI for 25 years or 30 years instead of 20 years. In such a situation, you have to pay EMI for a long time and you pay a large amount to the bank in exchange for the loan.
Let’s assume that you have planned to take a loan of Rs 30 lakh for 20 years. At the rate of 9.55 percent interest, your monthly EMI will be Rs 28062. In 20 years, you will have to pay a total interest of Rs 37,34,871. At the same time, you will pay a total of Rs 67,34,871 to the bank, which includes both interest and principal.
But if you increase the EMI by 5 years, i.e. take a duration of 25 years, then the monthly EMI will be reduced to Rs 26315, but you will have to pay a total of Rs 48,94,574 as interest. At the same time, you will pay a total of Rs 78,94,574 to the bank by adding the principal and interest. Which will be more than Rs 11 lakh in comparison to 20 years.
Home Loan Tips: What should you do?
If you want to avoid the pressure of increasing home loan interest from time to time, then you have to be alert. Keep checking your home loan account and whenever the interest rates increase, you have to talk to the bank and get your home loan restructured. That is, you have to tell the bank not to extend the period. For this, the bank charges you a nominal fee and restructures your EMI. But many customers are not alert and after paying the loan for several years, they find that they still have almost the entire duration left.
What are the other measures to repay home loan quickly?
Choose Fixed Rate Loan : When interest rates are rising, choosing a fixed-rate home loan over an adjustable-rate home loan is often a good option. With a fixed rate mortgage, your interest rate will remain the same throughout the tenure of the loan.
Keep the tenure short: Keep the loan tenure short. If you take a loan for 15 years instead of 20 years, then the interest on the overall loan can be very low.
Make a higher down payment: If you can afford a higher down payment, choose this option. Increasing the down payment can help you structure your home loan to cope with rising interest rates.
Refinance your loan: If interest rates have increased since you took the loan, refinancing may be a good option. Refinancing at a lower interest rate will help you reduce your monthly EMI.
